Real Estate Glossary Terms Beginning With – N

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Updated: November 22, 2021

Terms Beginning With - N

Property Development & Investment Glossary, Terms & Definitions

N/2

Abbreviation for "north one-half," which is commonly used in the government's land survey method of describing property.

Naked title

Bare title means that you own the property, but you don't have any of the usual rights and privileges. A trustee can hold the title to a property that is secured by a deed of trust, but only as much of the title as is needed to carry out the terms of the lien document.

Name, change of

Use a different name. A person can change his name by using another name with the intention of making that name his legal name, as long as he is not trying to trick anyone. But because it could be hard to tell who someone is, most people who change their names do it in a formal way. This usually involves filing a petition with the right state authorities. They might also have to write about the change in the local paper for a certain amount of time. A divorce decree can also include a name change, letting a woman go back to her maiden name or the name of another ex-husband. A corporation can change its name by filing a change to its articles of incorporation in the state where it was formed.

People who change their names should make sure that their new name is properly recorded at the registrar of titles office if they own registered property and at the recorder's office if they own any other recorded properties. For example, a written document should be changed to say "Cathy Jones, who got the title as Cathleen J. Arbuckle."

If someone uses one name as a grantee of property and then gives the same property to someone else using a different name, there could be a problem with the recorded title. When the second deed is recorded, it will not be in the right place in the chain of title. This means that the world will not know what it says. For example, if a single woman named Patty Lee got the title as Patty Lee and then got married and changed her name to Patty Wilson, there would be a mistake in the record title. Patty Lee's name should be changed to "Patty Wilson, formerly Patty Lee." So, a proper entry would be made in the grantor-guarantee index so that a title company searching the title could see that the new deed came from the chain of title in which Patty Lee was the grantee.

Title searchers find it helpful when a married woman keeps the name her parents gave her. For example, Patty Ann Lee wouldn't become Mrs. Robert Wilson but rather Mrs. Patty Ann Wilson or Mrs. Patty Lee Wilson.

Name, reservation of

The right to use a trade name or company name on its own. Anyone who wants to start a corporation or change the name of an existing corporation can reserve this right. Most of the time, you file an application with the right state authorities and pay the right fee to reserve a name.

The National Association of REALTORS® has worked hard to keep its trade name, REALTOR®, from being used by anyone else.

NAREIT

The National Association of Real Estate Investment Trusts is a trade association for real estate investment trusts.

NAREIT index

A value-weighted index that monitors the total return patterns of all exchange-traded real estate investment trusts (REITs). The National Association of Real Estate Investment Trusts has created this video.

NARELLO

ARELLO used to go by this name.

Narrative report

To arrive at a value estimate for a piece of real estate, an appraiser must offer all relevant facts and figures about that particular piece of real estate and the market for that particular type of property. According to the short form (or check report) and the letter report, this is a lengthy document.

National Association of Home Builders (NAHB)

Traditional neighborhood development (TND) project examples, green building/cluster development, and urban infill development; news on housing construction trends and costs.

National Association of Realtors

A major trade or professional association for real estate brokers. Members commit to follow an ethical code.

National do not call registry

The Federal Trade Commission (FTC) keeps a national list of phone numbers whose owners do not want to get telemarketing calls. The free registration at www.donotcall.com gives people a choice about telemarketing calls. It works about 31 days after the number is registered and stays active for five years. The National Do Not Call Registry does not stop political groups, charities, or telephone surveyors from calling people. It also doesn't stop telemarketers or sellers from calling customers with whom they have a business relationship for up to 18 months after the last purchase, delivery, or payment, even if the customer's number is on a list of people who shouldn't be called. The company can also call the customer up to three months after he or she has asked a question, filled out an application, or given written permission. If the customer has told the business not to call, the business may not call. A person with a real estate license can only call a "for sale by owner" if they have a buyer who is interested in the property. If the for sale by owner is on a list of people who don't want to be called, the licensee can't call to get the listing. 

National environmental protection act (NEPA)

The law was passed in 1969 because more and more people wanted cleaner water, air, and land. It is seen as the national responsibility for protecting the environment. The NEPA created the Environmental Protection Agency (EPA), which has made programmes and done activities that affect, protect, and improve the quality of the environment. 

National flood insurance program (NFIP)

A government programme established in 1968 to address the escalating cost of taxpayer-funded flood relief and the growing amount of damage caused by floods. The NFIP is managed by the Mitigation Division of the Federal Emergency Management Agency (FEMA), which also administers the floodplain management and mapping aspects of the programme.

Natural affection

A word used to describe the bond that exists between close relatives (such as father and son and husband and wife). Such attachment is referred to as "excellent consideration" rather than "valuable consideration" in contract law. However, a valuable consideration is required to establish a contractual commitment and make the contract enforceable.

Natural person

An individual, as opposed to a company or a partnership, is a natural person.

Natural price

Adam Smith's long-run, market-determined price notion. Smith believed that in the long term, the price of all commodities and services would equal the cost of production.

Natural vacancy rate

When the usage (rental) market is in equilibrium, the percentage of potential gross income that is not collected.

Navigable waters

A saltwater or freshwater body large enough to ebb and flow and capable of carrying a commercial vessel (a "highway for commerce"). The Army Corps of Engineers is in charge of navigable waters in the United States. Bordering landowners have riparian rights when it comes to non-navigable waters.

NCREIF Property Index

A measure of the past performance of income properties owned by pension funds and profit-sharing schemes. The National Council of Real Estate Investment Fiduciaries publishes this report quarterly.

Negative Amortization

The main balance of a loan is less than the amount necessary to meet the amount of interest owed depending on the amount paid regularly by the borrower. In most cases, the unpaid interest is applied to the outstanding principle sum.

When a loan payment is insufficient to meet the interest cost, the unpaid interest is added to the initial balance, causing the loan amount to rise.

An interest shortage that is added to unpaid principal when monthly payments are less than the correct amortized amounts and the loan balance climbs rather than decreases during the period of the loan. The interest shortfall is sometimes applied back to the loan and is due at maturity. For example, amortized payments on a 30-year adjustable mortgage loan would be based on a 3% rate for the first six months, but interest against equity would be charged at 8%, and the interest rate charged would fluctuate every six months. Negative values in some loans can be made up by applying the deficits to the borrower's down payment equity.

A loan with an increasing rather than decreasing debt sum over time.

Negative cash flow

When the cash costs of maintaining an investment (taxes, mortgage payments, and maintenance) exceed the cash income generated by the investment. Let's say an investor buys a $70,000 condo apartment with a $10,000 down payment and a contract for deed that says the $60,000 balance will be paid off in $600 monthly payments (all expenses included). Also, let's say that the apartment only costs $400 a month to rent. In this case, the owner would lose $200 every month out of his or her own pocket. This is called a negative cash flow. Some investors choose to buy a real estate investment that has a negative cash flow because they believe that when they sell the property, its value will have gone up, giving them a good return on their investment.

Under the Tax Reform Act of 1986, renting out property is considered a "passive investment," and any losses can only be used to offset other passive income. People with adjusted gross incomes (AGI) of less than $100,000 can deduct up to $25,000 in net losses from renting out a home or business from their regular income. When a taxpayer's AGI is between $100,000 and $150,000, this deduction starts to go away. Negative carry is another name for it.

When your spending outweighs your income.

Negative easement

An easement that prevents the servient landowner from performing an otherwise permissible act, such as a building limitation or a view easement.

Negative Gearing

Negative cash flow occurs when the income from a property (typically rent) is insufficient to meet the costs of ownership, such as loan repayments, upkeep, taxes, and management fees. The perk is that interest on investment property loan repayments is tax deductible.

When the return on an investment isn't enough to cover the costs of the investment, the amount of income that can be taxed goes down.

Negative leverage

Leverage in the other direction.

Negligence

Under the circumstances, failure to employ ordinary or reasonable care.

Negotiable instrument

Any written document that can be given to someone else by endorsement or delivery to give them legal ownership. Checks, publicly traded stocks, and promissory notes are all instances of negotiable instruments. Negotiability refers to the ability of these instruments to circulate like money. A promissory note, for example, must be an unconditional promise made in writing by one person to another and signed by the maker engaging her to pay a specified sum of money to order or to bearer on demand, or at a fixed or determinable time. It's critical to employ negotiable terms like "pay to Bob Reininski," "order," and "carrier." It's worth noting that only the individual (or people) whose name appears on the instrument are responsible. As a result, unless his name appears on the instrument, a principal is not accountable.

A holder in due process is someone who accepts a negotiable instrument in good faith for a valuable consideration without being aware of any flaws, and against whom the note's manufacturer cannot invoke personal defenses (such as lack of consideration) to withhold payment.

A transferor assumes certain warranties about the negotiable instrument under the Uniform Commercial Code, such as that it is genuine and is what it purports to be; that the transferor has good title; that all parties involved have the capacity to contract; and that the transferor is unaware of any fact that would impair the contract's validity or render it worthless.

Negotiation

The act of negotiating is a business transaction aiming at establishing a consensus among the participants. The following is an example of the negotiation process in real estate: The first offer for a property is frequently seen as only a desire to bargain. A sequence of counter offers followed, culminating in the transaction's completion. Negotiation usually begins after the broker's efforts have progressed to the point where the prospect is regarded as a likely buyer.

A safety clause, also known as an extension or override clause, in most listing forms allows the broker to collect a fee for a defined period of time after the listing is terminated if the listed property is sold to someone with whom the broker was negotiating before the listing stopped. This is true if the broker registered the names of such individuals with the seller before the listing expired. In this context, negotiating entails more than simply connecting the parties; it also entails conducting business, bargaining, and raising enough interest to effect a purchase and sale.

Concessions (such as temporarily free rent) are negotiating topics in commercial lease agreements that are chosen in the prospective tenant's favor.

Real estate commission rates are negotiated between the parties rather than being set by legislation.

The negotiations between two or more parties to obtain an agreement on a transaction's terms and circumstances.

Neighborhood

A neighborhood is a gathering of similar buildings, individuals, or businesses.

A section of a city or town that shares characteristics that set it apart from neighboring places.

A geographical region with similar population and land use characteristics.

Areas that are next to each other and have similar populations and land uses.

Neighborhood influences

A neighborhood's popularity is influenced by several factors. Physical, economic, and geographic aspects are examples of these.

Neighborhood shopping center

This sort of centre, which is located for the convenience of a nearby resident population, has retail enterprises that mostly provide convenience products. Typically, it is "anchored" by a supermarket.

A collection of 15 to 20 retail buildings that offer a variety of convenience stores (barbershop, dry cleaning), share parking and management, and serve 1,000 or more families.

A modest shopping complex with 20 retail establishments and a grocery or drugstore as the anchor tenant. 50,000 square feet is the average size.

Shopping malls that service a trade region from which consumers may drive by car in five to ten minutes. Food shops and drugstores are common anchor tenants, with a combined total space of 35,000 to 50,000 square feet.

Net (single) lease

In the case of a loan foreclosure, a mortgage condition that provides for the continuance of any leases.

Net absorption

An inventory change is how many square feet of space are used by people who live in a building at a given time. This includes the addition or removal of buildings during that time.

Net after taxes

After taking out all costs, including federal and state income taxes, the net operating income is what is left.

Net Asset Value

The evaluated worth of a REIT's or real estate fund's properties minus the REIT's or fund's liabilities (debt).

Total market value of a REIT's core assets excluding mortgages and other obligations.

Net cash flow

Net monetary advantages received by an individual or group of individuals as a compensation for contributing cash to a business. Net cash flow before taxes excludes the tax effect of investments, whereas net cash flow after taxes includes the tax effect of investments.

Net Effective Rent

All operating expenditures, rental concessions, tenant improvements, and other costs are deducted from the gross rent. This might be a negative number.

Net income

Taxes are taken out of the gross income before taxes.

The amount left after taxes, insurance, and allowances for vacancy and bad debts have been taken out of a business or investment's gross income. The property's net income is how much money it makes in a given year. It is usually calculated before depreciation is taken into account.

Net income multiplier

A cash flow multiplier derived by dividing the acquisition price by the net operating income.

The market worth of a property expressed as a multiple of its net operating income.

Net leasable area (NLA)

The useable floor area of a business building leased to a tenant, excluding hallways, toilets, and utility space.

The area of a building that is leased to a tenant.

Net lease

Tenants are obligated to pay all property running costs under a lease arrangement.

In addition to rent, the renter pays part or all of the property's operational expenditures.

On top of the agreed rent, your lessee is accountable for all building outgoings.

A business lease in which the lessee is responsible for not just the rent but also for maintenance and operational costs such as taxes, insurance, utilities, and repairs. The rent paid to the lessor is "net." This type of lease is popular among investors who desire a consistent stream of revenue without dealing with the hassles of management and maintenance. Net leases are often commercial or industrial leases, ground leases, and long-term leases.

Because usual interpretations of the phrase net lease are so broad, it's critical to read the lease paperwork to figure out what costs the renter is responsible for. In a true net lease, the renter is responsible for all expenses associated with the premises, just as if they were the owner. Real estate taxes, special assessments, insurance premiums, all maintenance charges, including labor and materials, cost of compliance with governmental health and safety regulations, payment of personal injury or property damage claims, and even costs of structural, interior, roof, and other repairs are examples of such expenses.

It's important to understand the difference between net rent (also known as base rent) and total rent (also known as effective rent).

Net listing

A type of contract in which sellers indicate the amount they will accept from the transaction, with brokers retaining any excess revenues.

A contract in which the broker receives all surplus funds over the minimum sales price agreed upon by the broker and seller as commission. Because of the risk of unethical actions in such a listing, most states discourage its usage, and many states make it illegal.

A listing that does not include the real estate commission.

Net Net Lease (or double-net lease)

The renter pays the agreed-upon rent plus utilities, real estate taxes, insurance, and upkeep under a lease agreement.

In addition to the rent, a lease that compels the renter to pay for property taxes and insurance.

Net Net Net Lease (or triple-net lease)

A lease in which the tenant is responsible for all maintenance and operation costs, as well as property taxes and insurance. A triple net lease is also known as a triple-net lease.

In addition to the rent, a lease that compels the renter to pay for property taxes, insurance, and upkeep.

Net Operating Cash Flow (NOCF)

Total income before mortgage payments, tenant upgrades, replacement revenues, and leasing commissions, minus operational expenditures and adjustments. This is the starting point for a lot of financial computations.

Net Operating Expenses

Total costs connected with running a real estate project.

Net Operating Income (NOI)

Gross revenue less operational expenditures equals effective gross revenue.

After mortgage payments, tenant upgrades, replacement revenues, and leasing commissions, total income is minus operational expenditures and adjustments.

The sort of revenue to a property utilized in direct capitalization, computed by subtracting vacancy and collection losses from projected gross income and adding other income to generate effective gross income. All operational expenses, including management charges and a reserve for replacements or capital expenditures, as well as any nonrecurring expenses, are deducted from this sum.

The amount of money left over after all expenditures have been deducted from the total amount of money received.

After deducting all fixed expenses, operating expenses, replacement reserves, and allowance for vacancy and bad debts from gross receipts, but before deducting any debt payment, income taxes, or depreciation, the balance is what remains.

Net operating income multiplier

The ratio of a property's sales or selling price to its net operational income. The overall capitalization rate is the reciprocal.

Net Present Value (NPV)

The total of all future revenues minus the sum of all future expenses, including the purchase price, discounted at the needed return.

The current capital worth of all the advantages of an investment less the initial cash cost.

The difference in the current values of cash inflows and cash outflows.

The renter pays the agreed-upon rent plus utilities and real estate taxes under a lease agreement.

Net proceeds

The amount of money received after all liens and expenditures have been paid.

Net sale proceeds

The anticipated selling price minus the selling expenditures.

Net spendable income

After collecting rentals and paying operating expenditures and mortgage payments, the money left over each year.

Net usable acre

The area of a property that is suitable for construction. It's possible that a 20-acre parcel has 20 gross acres but only 15 net useable or buildable acres. Local zoning regulations generally base density limitations on the property's net useable acreage.

Net worth

After subtracting obligations from assets, the value that remains. Many private real estate syndicates have their own appropriateness rules for prospective investors, which often include a minimum net worth requirement. New accredited investor restrictions were developed by the Dodd-Frank Act, which influence real estate syndications.

Net yield

After all costs, such as loan servicing and reserves, are removed, the fraction of total return that remains.

Netting out

This is a slang term for the amount of money the seller wants to get from the sale of a property, or the amount that can be put in the seller's pocket after expenses and liens have been paid. Most of the time, though, the broker's commission is based on the gross sales price, not the seller's net price.

Network analysis

The process of determining early and late start and conclusion dates for completed project tasks.

New town

A more recent approach to urban planning that emphasizes a well-balanced use of land and the provision of a wide range of amenities, including housing, recreation, education, and religious institutions. Foster City, California, or Reston, Virginia, are examples of new towns that were constructed in previously undeveloped areas near existing municipalities. It is designed to be self-contained and self-governing.

The concept of a "new town in town” is a new town within a city area, such as an urban renewal clearance area. Roosevelt Island, for example, is connected to New York City by a five-minute aerial tramway ride.

New urbanism

School of thinking that tries to resurrect pre-automobile residential neighbourhood elements such as sidewalks, houses with front porches near to streets, small, grid-pattern streets, and supporting non-residential services dispersed throughout communities.

NHP Foundation (NHPF)

A non-profit group that helps people with low to moderate incomes find affordable multifamily housing. NHPF uses commercial bank financing, permanent tax-exempt bonds, and low-income-housing tax credits to build, fix up, and give affordable housing to more than 20,000 people in 17 communities across the United States.

No action letter

The Securities and Exchange Commission's staff has published an opinion (SEC). "No action" letters cover a wide range of topics, including telling an applicant that the SEC will not require a proposed project to register as a security based on the facts stated in the request for opinion. When a project is classed as a security, it is subject to a slew of regulations and restrictions. To avoid these laws, it is advantageous for project creators to avoid having their projects classified as securities. The SEC may issue an interpretation to a developer of a planned resort condominium that the project does not include the issuing of a real estate security. The developer will do so by submitting a request for a "no action" letter in accordance with the method outlined in the Securities Act of 1933 regulations. A developer may also request a "no action" letter to certify that their project is not subject to the federal interstate land sales subdivision laws.

No deal/no commission clause

A part of a listing contract that says a commission will only be paid if and when title changes hands. This goes against the common belief that a broker earns a commission when he or she brings a "ready, willing, and able" buyer to the seller at the price and on the terms set out in the listing agreement.

No-Doc Loan

A loan given to a home buyer whose income has not been confirmed.

NOI (net operating income)

After deducting operating expenses from gross income, cash flow from rental income on a property.

Nominal consideration

A compensation unrelated to the true value of a contract used to conceal the underlying value of the property being ceded; in name only and unrelated to actual market value Instead of the full selling price, a deed will often list a small amount, like "ten dollars and other valuable consideration," instead. Such a small amount of money makes it clear that the grantee is a buyer and not a donee (a person who receives a gift). As a good-faith buyer, the grantee is protected by the state's recording act.

A broker can't be involved in a document where a false consideration is named, unless it's a clearly nominal consideration. To do so would not only be unethical, but it could also lead to the broker's license being suspended or taken away. 

Nominal interest rate

The interest rate indicated in a note or contract, which may differ from the true or effective interest rate, particularly if the lender discounts the loan and advances less than the full amount.

Borrowing cost quoted. Due to expenses like loan origination fees and the cost of maintaining necessary compensatory balances, actual or effective interest rates may be significantly higher.

Nominee

In a limited sense, one who is designated to function as a spokesperson for another. When the principals do not want to be identified, a nominee corporation is occasionally utilised to purchase real estate. When structuring a transaction through a nominee corporation, take care to avoid any negative tax repercussions, such as double taxation of the nominee corporation and subsequently the shareholders.

Nominee is not synonymous with assignee. The genuine buyer may not be able to achieve particular execution of the sales contract to the nominee, especially if the transaction is based on seller carry-back financing, because there is no real mutuality of agreement and because the contract is indefinite. No legal rights are transferred when a person is designated as a nominee. Assignee status, on the other hand, is a substitute for legal rights. As a result, in most circumstances, the parties' intended outcome of effectively transferring legal rights to the ultimate purchaser is better achieved by using the word assignee rather than nominee.

A real estate syndicator who is the buyer but not the ultimate purchaser frequently uses the nominee form. It can also be utilized to acquire the replacement property in a Section 1031 exchange.

The offer should always specify the offeror; for example, in the deposit receipt section of the offer, neither the terms buyer nor nominee nor buyer nor assignee should be used. Otherwise, the designated buyer could simply walk away from the transaction and instruct the seller to seek recovery from the nominee. As a result, most courts would find the contract void and unenforceable.

Non recourse

There is no risk to the individual.

Non-amortizing

Loans that need interest payments but do not require regular principle payments.

Non-Performing

The obligor has missed at least three scheduled payments on a loan or other receivable.

Nonbasic employment

Jobs that do not include the creation of products or services that will be exported outside of a community. These are mainly professions that require serving local folks. Barbers, beauticians, most retail, real estate, and insurance salespeople, and local bankers are all examples.

Noncompetition clause

A clause in a contract or lease that says someone can't own or run a business nearby that would compete with one of the parties to the contract. This clause is also called a "no-compete clause." The courts will follow this kind of rule as long as the time and place are reasonable. Also, if adding a non-compete clause gives the contract more value, that value is usually counted as regular income for the party who got it. The clause's creator then puts this value in capital and spreads it out over the life of the covenant. There are often non competition clauses in percentage leases for shopping centres. For example, a shoe store tenant might agree that the centre won't open a competing shoe store across the street. When it comes to federal and state antitrust laws, these kinds of clauses have been closely looked at.

Nonconforming conventional loan

A conventional loan that does not meet one or more of the underwriting requirements needed by Fannie Mae and Freddie Mac for acquisition in the secondary market.

Nonconforming use

A land use that is incompatible with the present zoning classification but is allowed to continue since it predates the current zoning. To be allowed to continue, the usage must be continuous, and the property structures cannot be significantly improved.

An authorized use of real property that was established and maintained lawfully at the time of its establishment but no longer complies with current zoning laws. The structure itself, the lot size, the use of the land, or the use of the structure could all be considered nonconforming uses. Although the nonconforming use status does not have to be ceased with the sale or lease of the property, it will eventually be removed. Allowing the use to continue for a reasonable period of time allows the government to ensure that the use will not continue indefinitely while also avoiding having to provide just compensation for condemning the land. When buying a nonconforming structure, buyers should be aware that zoning laws may prevent the structure from being rebuilt if it is substantially destroyed by fire or other means. In this instance, a buyer should speak with an insurance representative about the possibility of acquiring demolition insurance. A nonconforming use may also come to an end if the property is abandoned. 

Nondisclosure

Failure to expose a fact, whether intentionally or unintentionally.

Nondisturbance

1. A clause in a mortgage that says the mortgagee agrees not to kick out rent-paying tenants if the mortgagee forecloses on the building of the mortgagor/lessor. If there wasn't such a clause, a foreclosure action could end the lease of a renter who signed the lease after the mortgage.

2.When a seller chooses to keep mineral rights to property that is being sold, the seller and buyer sign a non-disturbance agreement that says the seller won't get in the way of any building or development on the surface of the land.

Nondisturbance clause

In the case of a loan foreclosure, a mortgage condition that provides for the continuance of any leases.

Nonhomogeneic

The notion that every property, even identical houses in a tract subdivision, is unique and has its own "bundle of rights." All buyers, sellers, and transactions are nonhomogeneous, which explains why property is valuable and all transactions are unique.

Nonjudicial foreclosure

Outside of the judicial system, the lender or a trustee sells the property of defaulting debtors at public auction. It must adhere to legislative rules, particularly when it comes to public announcements of the sale.

A power of sale in a defaulted mortgage or deed of trust allows you to sell real estate. The lender cannot then get a deficiency judgment in many states, but not all. Furthermore, some title insurance firms will not offer a policy unless the mortgagor's interest has been judicially foreclosed.

Nonmonetary

The non-financial costs and advantages of a business decision.

Nonpoint Source

Water contamination from a dispersed source, such as the atmosphere or agricultural land.

Nonprofit corporation

A nonprofit corporation created for a charitable, political, fraternal, educational, or trade purpose. These companies, often known as eleemosynary corporations, do not have shareholders (as do profit-making corporations). They only have members who have no entitlement to corporate dividends or assets, although not being individually accountable for corporate debts. Nonprofit corporations have control over their assets, and their operations are managed by a board of directors. These corporations can enter into contracts and buy and sell real and personal property in their own names. IRC Section 501 contains the specific tax provisions that apply to nonprofit corporations.

Non Realty items

Personal belongings

Non Recourse loan

A loan in which the borrower is not personally responsible for the debt. A non recourse loan's lender is often convinced that the asset utilized as security is adequate for the loan. Also known as a "dry" mortgage.

In a real estate syndication, nonrecourse financing is utilized to allow limited partners to contribute their proportionate share of the mortgage to their tax base for the purposes of computing depreciation deductions or taking other losses.

Loans that release the borrower from personal obligation but do not release the property as collateral.

Normal sale price

The purchase price of a comparable property after adjusting for non-market financing and non-arm's-length negotiating (conditions of sale).

Normal wear and tear

Physical wear and tear that happens when a property is used normally, but not because of negligence, carelessness, an accident, or abuse by the occupants or their guests. Normal wear and tear is not the tenant's fault if the value of a rental home goes down. So, the landlord can't keep the security deposit because of this kind of damage. Normal wear and tear is defined by the Uniform Residential Landlord and Tenant Act as the value of something going down because of normal and reasonable use. Not included in this, though, are things that are missing from the dwelling unit. Along with functional and economic obsolescence, normal wear and tear is a major cause of property depreciation.

The length of time a tenant lives in a unit is an important factor in figuring out if the wear and tear is fair. For example, if the same renter has lived in an apartment for three years, it's likely that the walls and carpet will need to be painted and cleaned.

Physical depreciation that occurs as a result of normal usage of a property.

Normalized expenses

An appraisal phrase describing a property's running expenditures as they would occur in a normal year.

Normalized net operating income

The net income number obtained by subtracting a typical year's operating expenditures from a typical year's effective gross income.

Nosing

A stair tread's rounded outer face.

Notary public

A person who works for the government and acts as an official witness. Notaries are responsible for giving oaths, attesting and certifying documents with their signature and official seal, which gives them credibility and authenticity, taking acknowledgments of deeds and other transfers, and doing official things like protesting rates and bills. If there is no seal, the notarization doesn't count. If someone has a stake in a document, they can't be a notary public for that document. In some states, the notary has to put up a "fidelity bond."

Note

The document (contract) that defines the particular conditions of a debt obligation and the borrower's accountability for the obligation.

A document that shows the loan amount, the interest rate, when and how the loan will be paid back, and the borrower's obligation to do so. The note shows that you owe money. When a mortgage is used as security, the note is called a mortgage note, and the payee is the mortgagee. Usually, a note in a trust deed is made payable to the bearer or the holder. Some of the same rules that are in the mortgage or trust deed document may also be in the note, such as the ability to pay off the loan early or get it paid off faster. 

A written promise to return an entity a specific sum on a specific date.

Notice

Contractual information. When two parties agree to end a one-year lease, for example, one of the parties must normally offer 30 days' written notice before the lease ends. Though oral notice is acceptable, it is usually preferable to provide written notice so that necessary notice may be proven.

A basic paragraph in most contracts covers the details of proper notification, such as "Any notices, requests, or demands from either party must be in writing and delivered personally or by Registered or Certified Mail, postage prepaid, to the seller and buyer at the addresses listed below. When notice is mailed, it is considered given.

Notice of assessment

A notice sent to the owner of real property by a state or local taxing body detailing the property's assessed value. Assume a home's market worth is $170,000, with $40,000 assigned to the fee simple land and $130,000 given to the modifications. Assume that the assessed value is 70 percent of the market value under local legislation. As a result, the assessed value of the renovations is $91,000, while the assessed value of the land is $28,000.

Notice of completion

A document that is filed in some states to let the public know that a construction job is done and that mechanics' liens must be filed within a certain amount of time for them to be valid. The notice of completion can be sent out by either the owner or the general contractor. However, the contractor usually can't send out the notice until the owner has been asked to do so in writing and hasn't done so.

If a mechanic does not file a written notice of lien with the clerk of the court where the property is located within the time limit, he or she will lose the right to a lien. Note that recording or filing the notice of lien is usually not enough to create a lien. The lien must be recorded with the clerk of the right circuit court, and a hearing must be held to find out if there is a good reason to enforce the lien.

Notice of consent

A legal process that lets a state official handle legal matters for people who don't live in that state. A sub-divider or broker from out of state, for example, often has to file a notice of consent in order to do business in a state.

Notice of default

A notice sent to a defaulting party informing them of their default. A grace period is normally given to the delinquent party to cure the default. Notices of default are regularly included in deed and mortgage contracts, and they are occasionally required by law. If a defaulting party receives a notice of default on Thursday before a long holiday weekend, the grace period should be at least five working days; otherwise, the defaulting party may not have enough time to remedy the default.

To avoid forfeiture of the property due to unintended default, the wise purchaser includes a language in the contract for deed mandating notice of default and a grace period for remedy of the default. Such notification shall be in writing and issued to the defaulting party at an address stated in the contract by registered or certified mail, return receipt requested.

As a reminder of the default, a letter is issued to the defaulting party.

Notice of dishonor

Document issued by a notary public on behalf of a person who holds a check whose issuer has failed to honor the payment terms. The notice serves as legal proof that the debt has not been settled.

Unless waived, the notice of dishonor is a crucial ingredient in any legal action brought by the holder against the endorser or drawer (as it usually is in most mortgage notes). "presentment" and "notice of protest" are two of the holder's related rights (to obtain an official certification of the nonpayment).

Notice of lien

In some states, a mechanic's lien application must include a specific written notice. The appropriate court where the property is located must be notified of the lien. A copy of the notice must be served on the owner and any other interested parties in the same way that a summons is served under the law: The notification must include the amount of the claim, the labor or material provided, an adequate description of the property, and the names of the parties who contracted for the improvement, the general contractor, the property owners, and any other person or persons with an interest in the property. A formal notice of lien served on any one of numerous joint owners is usually considered service on all owners. The notice of lien must be submitted within a particular amount of time after the improvement against which it is filed is completed.

The lien is only attached after the court has ruled that there is probable cause to believe the mechanic's claim is valid. Many states now demand a probable cause hearing in reaction to recent Supreme Court judgments upholding an individual's constitutional right to notice and a hearing before losing property rights.

Notice of nonresponsibility

A legal notice intended to absolve a property owner of liability for the costs of modifications authorized by someone else (such as a tenant). Owners typically give notice that they will not be responsible for the work by posting a notice in a prominent location on the property and registering a verified copy in the public records.

Notice to quit

Allows a landlord or tenant, under specified conditions, to terminate a tenancy without the consent of the other.

A landlord's written notice to a tenant that the landlord wishes to reclaim ownership of the leased premises and that the tenant must vacate and surrender the property. If there is a breach of lease, or if the tenancy is at will or by sufferance, the notice to quit can state that the tenant must vacate either at the end of the lease period or immediately. A notice to quit based on nonpayment of rent usually allows less time to cure the default than a notice to quit based on property damage or another reason. This word is occasionally used to describe the notice given by renters to their landlords that they intend to vacate on a specific date.

A tenant's notice to depart the rented property.

Notorious possession

Possession of real estate that is widely recognized.

Novation

The acceptance of a new debtor in place of an old one by the parties to an agreement; the substitution of new parties to an existing obligation by the parties to an agreement. In the case of a loan assumption, the lender may release the seller and replace the buyer as the primary accountable party for the mortgage obligation. Novation necessitates the intent to terminate the original contract, as well as its own consideration and other criteria of a legal contract. However, unless a novation occurs, a tenant who assigns a lease to another is still accountable for the original lease.

Nuisance

Doing something or acting in a way that makes it hard for someone else to use or enjoy their property in a legal way is against the law. A private nuisance only affects a small number of people, while a public nuisance, like too much noise from jet planes, affects everyone in the area. If a use is considered a nuisance, the person who is bothered by it can sue for damages or an injunction to stop it. For example, a neighbor could be stopped from running an open garbage dump. Activities that make too much noise, smell bad, or pose fire risks are common examples of nuisances.

Null and void (NULO)

A contract that can't be enforced.

Without legal force or effect; worthless; unenforceable; not binding. Restrictive covenants in a deed or other instrument that are discriminatory are void.

Nuncupative will

A will that was spoken out loud by the testator right before he or she died, in front of witnesses, and then quickly put into writing by the witnesses. Most states don't let this kind of will stand, and it is usually only used by people in the military or to give away personal items.

Nut

This is a slang term for the cost of keeping a property, such as the monthly nut for an investment property.

Glossary Index

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